The Propriety of Benefit-Spreading Regulations Under the 10% Lending Limit of the National Bank Act

This Note examines whether the ten percent lending limit of the National Bank Act should be used to promote benefit-spreading. Section I evaluates the legislative and judicial history of the lending limit and concludes that Congress never intended the Comptroller to issue regulations to foster benefit-spreading. Section II examines the practical ramifications of the benefit-spreading regulations. It concludes that the lending limit cannot effectively foster benefit-spreading without undermining the risk-reducing function of the statute; that compliance with the benefit-spreading regulations is costly while the penalties for noncompliance are inappropriate and unfair; and that existing statutes better promote benefit-spreading while avoiding the pitfalls of the section 84 regulations. The Note therefore concludes that the Comptroller should retract the benefit-spreading regulations. Until he does so, courts should ignore the regulations and Congress should repudiate the use of section 84 for benefit-spreading.